AMERICAN GENERAL CORPORATION

AMERICAN GENERAL CORPORATION. American General Corporation, headquartered in Houston and parent of the American General Life Insurance Company, is one of the nation's largest insurance and financial-services organizations. It incorporated in Houston in 1926 as the American General Insurance Company, a fire and casualty insurance business, with Gus Sessions Wortham as president and John W. Link as chairman of the board. Wortham, a Houston native, learned the business at the John L. Wortham and Son Agency, founded in 1915 by his father. When his father died, Wortham responded to a new ruling by the Commission of Appeals of Texas that enabled him to organize one of the nation's first multiple-line insurance companies, or firms permitted to underwrite both fire and casualty insurance. Initially the agency managed the new company, absorbed its costs of expansion, and directed business to it.

American General paid a dividend in 1929 and every year thereafter. The company grew in the 1930s despite the Great Depression and by 1936 had capital and surplus exceeding a million dollars. Diversification began in 1939, when the company established its first subsidiary, the American General Investment Corporation, to finance real estate, automobiles, and other purchases. By that time the company was licensed to operate in nine states and had assets of over $2 million. Further diversification in 1945 resulted in the acquisition of Seaboard Life Insurance Company, a Houston-based life and health insurance company that did business solely in Texas. Burke Baker served as president and R. H. Baker, formerly of Equitable Life Insurance Company of New York, as chairman.

Benjamin N. Woodson, a former managing director of the National Association of Life Underwriters and later American General president, joined the firm in 1953. Before his retirement as chairman and chief executive officer in 1978, Woodson expanded the company into national markets. Between 1954 and 1964 American General acquired a fire and casualty company in Marshall, Texas, and life insurance companies in Hawaii, Nebraska, Oklahoma, and Pennsylvania, and in the 1960s it diversified into financial services other than insurance, including the distribution of mutual funds, mortgage banking with real estate subsidiaries, the sale of variable annuities and title insurance, equipment leasing and financing, and investment counseling. In 1964 it acquired the Commercial and Industrial Life Insurance Company of Houston and the Maryland Casualty Company of Baltimore, a property and liability company founded in 1898. The acquisition made American General a major property and casualty insurer and expanded its reach to every state and Canada. Company headquarters on Buffalo Bayou in Houston were completed in 1965.

American General acquired the Patriot Life Insurance Company of New York in 1966 and between 1975 and 1982 made thirteen divestitures and twelve acquisitions, among the latter the Variable Annuity Life Insurance Company, an innovator in sales of tax-deferred annuities to the employees of nonprofit organizations. In 1968 it acquired the Life and Casualty Insurance Company of Nashville, a regional insurer with $1 billion in assets, and a majority interest in California-Western States Life Insurance Company, whose leader, Harold Swanson Hook, joined the firm in 1975. By 1974 American General, with $674 million of capital and surplus, was the largest financial organization in Texas. As the company's third president, Hook embarked on a new growth program that brought twenty new firms into the company and nearly tripled its size.

In 1980 American General Insurance Company became a general-business holding corporation to simplify its regulatory environment and reflect its evolving structure. The American General Corporation, as this parent company was named, coordinated the operation of company subsidiaries throughout the decade as it developed a reputation for buying other insurance companies and profitably assimilating them. In 1982 Hook completed a merger with NLT, the parent company of the National Life and Accident Insurance Company of Nashville, Tennessee, and entered the consumer-credit business by acquiring Credithrift Financial of Indiana. He also acquired the General Finance Corporation and Gulf United Corporation's insurance properties. By this time the company employed 13,205 workers and had assets of over $32 billion dollars. American General moved to new corporate headquarters in 1985. In 1988 the company doubled its consumer-finance operations by acquiring the consumer-finance division of Manufacturers Hanover, but in 1989 sold its property-liability segment to a Swiss-based insurer and group life and health insurance operations to Associated Insurance Companies.

In 1991 American General merged California-Western States Life Insurance Company into a subsidiary, the American General Life Insurance Company of Delaware. American General Corporation is the parent company of a number of subsidiaries. In the 1990s, with $23 billion in assets, American General offered home-service insurance, special-markets insurance, and the services of a finance and real estate division. It continued to obtain more than half its earnings from door-to-door insurance sales and employed 16,000 workers and 48,000 agents and salesmen.

BIBLIOGRAPHY:

American General Corporation: History, 1926–1986 (Houston: American General Corporation, 1986). Benjamin N. Woodson, Financial Services Supermarket: The American General Story (New York: Newcomen Society in North America, 1974).

Jason M. Olson

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.